Fishing For Investors

August 22nd, 2016

 

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In August the docksides and inlets in North Norfolk are lined with kids casting bait (bacon or salami are highly effective) on primitive fishing lines to catch the abundant crabs that lie close to the surface. Perhaps the crabs know the odds are stacked in their favour or they are so greedy but little boys and girls pluck them out at will before returning them to the sea.

What would entrepreneurs and executives give for a similar ease with the capital raising process? The reality today is that unless you are a well known “brand” with a powerful investor network, raising money is hard. Investors can be very choosy, they largely congregate in locations with big clusters of potential businesses to invest in and they are drawn to people, who have demonstrably made investors serious cash on cash on multiple occasions.

1. What are you doing to dramatise your value to your ideal investor(s) and the singularity of your investment proposition? (Use of powerful language, a peer of opinion makers, harnessing evangelists, creating excitement and so forth)
2. Why invest in you? (“Hot” proposition in the investor’s sweet spot)
3. Why invest now? (Brief window of opportunity)
4. Why invest in the manner you are proposing? (Special circumstances).

Time is the most precious commodity. You cannot rely on the kids fishing line, you must caste a fishing net to attract potential investors. You need to know where the high potentials reside. You need compelling “bait”. You need multiple conversations to be constantly moving in parallel, not sequential stages. You need to be constantly replenishing the investor pipeline with high quality leads. This is not a kids sport, this is your wealth at stake. Time to get serious.

© James Berkeley 2016. All Rights Reserved.

Abandoning Growth

August 18th, 2016

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I am at a zoo in the English countryside with my daughter, watching rare breeds of monkeys play and eat. Once they have chewed on the best bits of lettuce they flick them off their perch onto the floor so they can make room for new supplies. They don’t hoard or persist in trying to nibble away at food that has passed its’ “sell by” date or they are bored with.

Yet in many expansive mid-market and larger businesses I see huge amounts of time invested and energy deployed in processes and activities that have long ceased to be effective. Managers lack sufficient focus, organisation, and the volition to make “tough calls” on what to abandon.

The consequence is that they are becoming less productive, they are self-limiting their value to their clients and the organisation’s growth potential.

Assuming there is no “spare capacity” in your business, in order to ascend to the next level of growth:

  1. What exactly are you going to stop doing or do less of this month and the month thereafter?
  2. When are going to schedule the time and where are you going to implement that?
  3. How will you measure progress and success?
  4. Who must be held personally accountable to ensure your goal is met?

In my own business, I have consciously made a decision to abandon working for owners of startups and early stage businesses unless they past a stringent “smell test”. I will only offer strategic advice on dramatic growth opportunitiest to investors with substantial means and managers of businesses with upwards of £50M enterprise value from 1st September. I plan to keep a bi-weekly calendar. Account for the time saved (emails not read, calls not scheduled, meetings not set, and follow up not required) in rejecting the offers and the increased productivity earned.

I currently receive 3+ requests a week from entrepreneurs and small business owners, particularly seeking help attracting growth capital. They have an unquenchable appetite for advice but by and large, a poverty mentality in paying for it and investing in their own performance. Sorry I need to better invest my time if I am to be more valuable to clients, who want to go where I want to go.

If monkeys can make that simple determination without fear, why cannot intelligent managers and ambitious organisations?

© James Berkeley 2016. All Rights Reserved.


 

 

 

 

Trusting Your Fundraising Technique

August 16th, 2016

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The crucible of the Olympics separates those, who implicitly trust their technique honed over early mornings and thousands of hours of practice and those, who fear the headlines that will be writ large about their despair. The “mental toughness” commentators talk about is really a mindset issue. A “fear of failure” cripples talent. A “no fear” mindset allows talent to flow.

Owners and top managers in growth businesses don’t have to wait four years for their golden opportunity. Rarely is your failure final, nor are you likely to be written off publicly.

Why cannot you walk into that investor meeting knowing you have tremendous value to bring and do your absolute best without fear? Why cannot you exude implicit confidence in your recommendations and demonstrate absolute credibility? If you knew you couldn’t fail what would you say to the current or prospective investor and how would you direct the conversation to convert the opportunity?

Many entrepreneurs and executives tell me hundreds of reasons why the investor passed on the opportunity. Most have reasonable language techniques but they don’t trust themselves in the moment. They freeze, their mind becomes scrambled and they default to “selling” (proving their worth) rather providing value (showing their worth) to the other party. When their conversation is subordinated to a sales pitch, which is quickly rejected, it is game over.

Believe in your skills and expertise implicitly and maintain a mindset that failure is temporary at worst. Your audience want you to succeed. They are investing 60 minutes of time because they believe it will be time well spent building a formal or informal relationship with you.

© James Berkeley 2016. All Rights Reserved.

 

 

 

 

 

Avoiding The Regulatory Tailspin

July 29th, 2016

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Countless businesses today are being thrown miles off course in accomplishing their profitable growth goals (banks, financial services, insurance, gaming, healthcare, energy and so forth) largely because of their own inadequacies. They are like the pilot who hits turbulence at 30,000 feet, loses their bearings and temporarily or permanently is sent into a tailspin. If you are going to fly, you accept there is a high probability of turbulence. If you are providing essential products, services and relationships in society today, expect to be held to account for your standards and behaviour. Stop moaning.

Leaders have two options: embrace or resist regulation. Then adjust the speed, direction and ascent of the profitable growth plans to accommodate the proposed changes. Here is what sets apart my very best clients:

  1. Positive Regulatory Mindset. Business leaders, who maintain a perspective that says “there are abundant opportunities in front of us, we didn’t wish the regulation but we will learn to live with it”, empirical evidence suggests dramatically outperform others. Change is a constant and our futures are about embracing change (biotech, pharma). Contrast this with those business leaders, who only see fear, limited opportunities on the horizon, vent loudly at the negative consequences and create Domesday predictions (airlines, agriculture, bookmakers). Change is a threat to their cosy status quo and they do their level best to resist it until such that they wearily accept it or fold their cards.
  2. Impressive Regulatory Engagement. Seek to be on the front foot with regulators, actively maintain a presence in the regulatory dialogue within the industry, take positions on regulatory boards and consumer watchdogs.
  3. Superb Regulatory Antennae. Most regulation is reactive to events, changes in consumer perception, media perception and political perceptions. Rarely can you accurately predict the timing but you can sense the shifting of opinions and the force fields (changes in critical factors ‘+’, ‘-‘ or ‘neutral’) that create the momentum for change.
  4. Rapidly Mine Regulatory Motives. Behind every regulation lies an emotional imperative. Understand why a powerful voice(s) at the regulator or consumer body discernibly sees their self-interests best served in implementing the new policies and procedures, in the proposed time frame and manner (increased power, greater influence, greater control, greater political influence, greater credibility and so forth).
  5. Quantify Regulatory Value. “Value” in the form of tangible, intangible and peripheral benefits that arise from regulation (although sometimes they may be hard to discern) and the investment required to enact it. Tangible benefits over a defined time period (clawing back funds over trading or market abuse scandals). Intangible benefits and the breadth of scope (bankers behavioural changes and sweeping industrywide cultural changes to treating their customers fairly). Peripheral benefits (structural market changes such as the Dodd Frank Financial Regulatory Reform Bill and the impact on proprietary trading businesses in investment banks). Lawmakers and regulators are typically prudent risk takers, smart business leaders are keenly attuned to how they weigh up the risks and rewards (personal and professional) and act.
  6. Anticipate Regulatory Opportunity. Outstanding businesses have a regulatory radar system (Corporate Affairs) embedded into the upper and mid-level line management tiers that excels at alerting them to: Why there is a need for regulation? (public sentiment) Why now? (window of opportunity) Why on the basis proposed? (tried and failed with other legislative tools)
  7. Acute Sense of Regulatory Timing. Can you identify the priority that is driving the need to enact the regulation (political fall out, media outcry, changes in public opinion etc)? Timing is about regulators and lawmakers priorities. Stuff gets done because they need to be seen to be doing something (seriousness, urgency and gravity behind the issue). Inevitably, it is almost overpowering, ill-conceived and often off target but that is not the point. Lawmakers and regulators can show they acted. Don’t blame us.

Large or small businesses, the dynamics are largely the same but the consequences are often dramatically different. How many of these skills, traits and expertise do you Managers possess today? What do your profitable growth plans demand that you possess in future in order arrive safely at your desired destination? How do you best upgrade your regulatory response toolkit and when?

© James Berkeley 2016. All Rights Reserved.

Education Technology To Trump Artificial Intelligence Buzz

July 22nd, 2016

I have had three separate occurrences this past month for family members needing quick advice for a range of more serious and less serious healthcare conditions. Here in the UK, the National Health Service’s Accident and Emergency Departments have become the repository for all conditions and advice outside of normal UK working hours, irrespective of the urgency or severity of the condition. According to one enthusiastic A&E nurse in a London hospital,  at a minimum 50% of patients don’t have a condition that warrants being there! We have a healthcare customer base that is

  • Increasingly uneducated about the resolution of minor and major health illnesses and injuries
  • Struggling with the increased automation in the healthcare system
  • Rapidly growing and drawn from very diverse backgrounds and cultures
  • Expecting greater access to world-class advice and near real-time resolution of all healthcare problems
  • Expecting free or near-free cost of advice and treatment
  • Reconciled by politicians that fear to speak out about the paucity of mass healthcare education
  • Comforted by a media that is only too keen to promulgate a sense of victim hood for a good headline

The response has been to rejig the supply of healthcare resources, the productivity of those resources and the automated processes. To channel all requests for help, outside of normal UK working hours, to emergency healthcare professionals, to ask them to enforce the prioritisation of all out-of-hours healthcare treatments, to perform to their best and to be on the front line taking the flak from patients and dependants frustrated at average wait times. Who would want to work in A&E?

Surely in this mobile-connected age there is a higher touch higher tech solution to the education, prioritisation, delivery of advice and resolution of illnesses and injuries? We are moving away from the archaic idea that every child gets the same textbook in school and in future embracing “adaptive learning”, where every child has materials updated in real time, customised to what they know and how they learn best. Using software to handle the basics and freeing children and teachers to spend the rest of the day interacting on group projects and personalised instruction. A back to the future revolution, not a dependence on online learning.

We have spent billions building “algorithms” that allow machines to ape human behaviour (artificial intelligence) but a tiny percentage of that on aiding humans to become smarter than the automation suppressing our talents and enthusiasm in the workplace. The NHS is but one example where we need to leverage technology to enhance, not replace us. To invest in human intelligence (customers, managers, employees and payors).

The same applies in almost every business. We suck the energy and life out of our employees and clients, asking them to perform basic activities without regard to the outcomes (onboarding clients, resolving complaints, adhering to redundant policies and procedures etc.). The automation is swamping their abilities to apply common sense, to provide outstanding customer service (speed and quality of response), to create loyal and “permanent” customers and in return obtain fulfilment from their work. How else explain the rising boredom levels in almost every professional workplace?

Yet executives in banks, insurance companies, professional service firms and others respond by deploying huge amounts of capital to harness big data and analytics, to make smarter artificial underwriting, investment and advisory decisions (models, augmented reality, robots and so on).  A tiny slither of that amount on enhancing their own managers, employees and customers intelligence, and when they do, it is on prosaic “one size fits all” training programmes, where they have close to zero understanding of the return on investment. Consequently, huge swathes of the workforce, management and customers are ill prepared for the disruption.

If you are not convinced that education technology from the children’s nursery through the workplace and into senior living represents a huge growth business and investment opportunity, you are sleepwalking through life.

© James Berkeley 2016. All Rights Reserved.

 

 

 

 

Holiday Etiquette

July 21st, 2016

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When you tell me “I am sorry I cannot get to this until I return from holiday”, what you really mean is I am not your priority. Fair enough holidays are for rest, relaxation and time with family and friends but if you aspire to a high level of routine discipline – setting aside 20 to 30 mins to respond to brief email, calls and so forth, at the beginning and end of the days is surely not impossible? What is more depressing is coming back to work with 600 unanswered emails and copious voicemail messages with increasing levels of frustration. Walk in with a smile not a frown on your face.

© James Berkeley 2016. All Rights Reserved

 

Who Transforms The Transformer

July 18th, 2016

Large advisory firms (Big Four and large management consulting practices) have cornered an expertise in transforming how large businesses deploy capital, manage human resources and IT, accelerate innovation and implement strategy. Yet many of those same “expert” firms are desperately in need of transformation.

How else do you explain the increasing tension between the commodity end of their work (outsourced shared service offerings) and the desire to grow the high-margin, high-value strategic advisory business? It is a fraying piece of string for those, who desire to play in both segments.

The complexity of the advisory businesses is such that an increasing proportion of front line employees time is being reserved for internal issues (tweaking matrix organisation structures, new value propositions, problem solving and fees), at the expense of the client. Yet there are very few people in those firms, who have the skills and volition to want to lead the change (“champion”).

Safety lies in the belief that your brand will get you the first meeting with the large client. Yet a cursory google search reveals very few Partners in these firms, who are demonstrably centres of expertise or objects of strong interest to C-level operatives and the wider global media. Inherently, the transformation business is a pricing battle dressed up in pseudo value-based fees.

Indeed, changing the operating beliefs that inform the behaviour of Partners and Directors in those firms is very hard. The outliers or mavericks in those firms are tolerated to the extent that they inject some colour into client relationships but they are very rarely embraced in the inner sanctum. So you end up with external market forces largely determining the future of these advisory firms.

A client wouldn’t take advice from Hilary Clinton on email etiquette or Donald Trump on diplomatic communication, why would they hire these folks? The only conclusion is that they feel safe in hiring lots of extra pairs of hands from a known brand so long as the price is right.

You’ll have a hard time convincing me that is right for the client and the advisory firm’s future.

© James Berkeley 2016. All Rights Reserved.

The Insurance Corporate Venturing Pulse

July 18th, 2016

When you introduce two good friends that you know from two completely different walks of life, there is that pregnant pause in which both seek to find a common connection and language to build a relationship. To the introducer, it seems perverse that there would be a delay, you know both people intimately and you have thought long and hard before introducing them. So I liken the insurtech corporate venturing world today.

Inherently it makes sense that entrepreneurial tech businesses have the capability to transform venerable insurance businesses. In most cases there are shared values and a receptiveness to make a relationship work. Yet there is an uncertainty born of speaking different “languages” and the reality that operates in their respective sectors (resisting and embracing change, regulation, corporate bureaucracy and inertia).

Having assisted a number of businesses on both sides of the table, here is my current take:

  1. The quantum of insurance tech money will double in the next 24 months. There will be a greater concentration of capital in the hands of a smaller number of powerful brands (VCs, CVCs and UHNWs), who are able to raise capital faster.
  2. You will rarely hear about the failed insurtech investments but be certain 80% of the so-called strategic investments will never be strategic, in that those technologies are successfully adopted into the insurance corporate venturing unit’s mothership.
  3. Only 50% of an insurance corporate venturing unit’s invested companies today will be their best corporate investments next year in view of internal and external changes.
  4.  A more formal insurtech investment ecosystem will arise with greater concentration in a smaller number of hubs (Silicon Valley, New York, London, Singapore) that foster innovative environments. If you are not “present” locally, as a service provider, you will not be in the game.
  5.  Speed will be as, if not more important a factor than the quality of the capital, for entrepreneurs in the best insurtech opportunities. Bad news, for insurance corporate venturing unitss with long decision-chains or timelines.
  6. Insurance corporate venturing units that create a powerful gravity to their brand will triumph over those who are largely reliant on opportunistic investment ideas landing in their “inbox”. Heightened importance of peer referrals, networking, publishing, speaking, writing and so forth.
  7. With increasing numbers of people in the insurtech ecosystem, there will be a filtering out of people (entrepreneurs, investors and others) who are truly centres of expertise and objects of interest. Having your CEO make blow-hard statements about his visit to Google, facilitating an insurance disruption event or thinking that merely pushing out generic position papers on your own or a third party’s platform will get you there, is a fool’s paradise.
  8. Tech entrepreneurs that live at 35,000 feet and are beholden to the future without regards to the health of today’s insurance industry, today’s realities of marketing an early stage business and today’s decision-making are living in cloud cuckoo land.

Copyright James Berkeley 2016. All Rights Reserved.

 

Interview With Me: cnbc.com

July 5th, 2016

In an interview with CNBC’s online platform, James shines a light on the challenge today for high-growth small businesses seeking to ascend to the next level and successfully transition ownership. Essential insight for entrepreneurs, HNW investors and Family Offices with direct investments in illiquid investments.

How To Sell Your Small Business

http://www.cnbc.com/2016/07/05/how-to-sell-your-small-business.html

Uncommon Perspective

July 2nd, 2016

In just over a week we have experienced dramatic political and financial gyrations here in the United Kingdom.

  1. No one has died, sharp words have been exchanged amongst politicians, bankers, business and families.
  2. Many well meaning and educated “remain” supporters have taken their ire to the peaceful streets.
  3. The markets have plunged 8% and in the case of the FTSE 100 largely recovered while the pound remains subdued by a state of “post traumatic stress”, as the Bank of England’s Governor described the current situation.
  4. Political leaders have seen dramatic twists in their career trajectories, yet calm largely pervades in London and elsewhere.
  5. Annual rituals at Wimbledon and Henley precede with full attendances, save for outbreaks of rain.
  6. We stopped to reflect on real tragedy, the start of the Battle of the Somme, 100 years ago and the unthinkable bravery and despair of so many young people and their families.
  7. Businesses continued investing, hiring new teams and buying/selling others this week. Life is largely continuing as it did 9 days ago.
  8. For sure, there is heightened awareness of tough choices to come over the next 24 months but people are still keeping their holiday plans, discretionary spending and going about their daily business.
  9. Yet many in the media, dumbfounded that their agenda has been hijacked by an unusual consensus project a life of disarray and gloom. Resisting change and throwing barbs at the democratic majority in this country. Deal with it. You are the problem now. Don’t expect others to start handing out the hankies.
  10. Look for the new opportunities that might capture the hearts and minds of Britons and others who choose to invest their time, money and energy here.

© James Berkeley 2016. All Rights Reserved.